Beware the proceeds of crime

Crawford's comments regarding the scale of fraud for household claims (page 8, 2 October, Insurance Times) were fascinating.

These are serious findings and here is a little reading exercise for every reader. Consider it in conjunction with Crawford's findings and then give some thought to a broker's or insurer's responsibility under the following sections of the Proceeds of Crime Act.

This is what Sections 327, 328 and 329 of the Proceeds of Crime Act 2002 say:

327 Concealing etc

(1) A person commits an offence if he:

(a) conceals criminal property

(b) disguises criminal property

(c) converts criminal property

(d) transfers criminal property

(e) removes criminal property from England and Wales or from Scotland or from Northern Ireland.

(2) But a person does not commit such an offence if:

(a) he makes an authorised disclosure under section 338 and (if the disclosure is made before he does the act mentioned in subsection (1)) he has the appropriate consent

(b) he intended to make such a disclosure but had a reasonable excuse for not doing so

(c) the act he does is done in carrying out a function he has relating to the enforcement of any provision of this Act or of any other enactment relating to criminal conduct or benefit from criminal conduct.

(3) Concealing or disguising criminal property includes concealing or disguising its nature, source, location, disposition, movement or ownership or any rights with respect to it.

328 Arrangements

(1) A person commits an offence if he enters into or becomes concerned in an arrangement which he knows or suspects facilitates (by whatever means) the acquisition, retention, use or control of criminal property by or on behalf of another person.

(2) But a person does not commit such an offence if:

(a) he makes an authorised disclosure under section 338 and (if the disclosure is made before he does the act mentioned in subsection (1)) he has the appropriate consent

(b) he intended to make such a disclosure but had a reasonable excuse for not doing so

(c) the act he does is done in carrying out a function he has relating to the enforcement of any provision of this Act or of any other enactment relating to criminal conduct or benefit from criminal conduct.

329 Acquisition, use and possession

(1) A person commits an offence if he:

(a) acquires criminal property

(b) uses criminal property

(c) has possession of criminal property.

(2) But a person does not commit such an offence if:

(a) he makes an authorised disclosure under section 338 and (if the disclosure is made before he does the act mentioned in subsection (1)) he has the appropriate consent

(b) he intended to make such a disclosure but had a reasonable excuse for not doing so

(c) he acquired or used or had possession of the property for adequate consideration

(d) the act he does is done in carrying out a function he has relating to the enforcement of any provision of this Act or of any other enactment relating to criminal conduct or benefit from criminal conduct.

(3) For the purposes of this section:

(a) a person acquires property for inadequate consideration if the value of the consideration is significantly less than the value of the property

(b) a person uses or has possession of property for inadequate consideration if the value of the consideration is significantly less than the value of the use or possession

(c) the provision by a person of goods or services which he knows or suspects may help another to carry out criminal conduct is not consideration.

It makes you think doesn't it?

This is what the FSA says:"Money laundering is an offence which involves the concealment, acquisition or use of criminal property or facilitating its concealment, acquisition or use, as defined for the time being in: section 327 (Concealing etc), 328 (Arrangements) or 329 (Acquisition, use and possession) of the Proceeds of Crime Act [2002]."

I do not think that it is our place to analyse the legal ramifications of the Act in relation to the general insurance market (we are speaking to an expert on the subject about writing a CPD article for us).

But in relation to the manner in which we transact business, I do think it is important that practitioners are alert to the existence of the responsibilities that might fall to them under the Act.

Frankly, if a leading expert in the matter of fraudulent claims and the ABI are both taking the matter so seriously, it is my opinion that this subject should become a critical addition (if it is not there already) to any practitioner's maintenance of competence programme.

It is not just a question of knowing and understanding what the Act or the FSA say on the matter. It is vital that practitioners are able to identify when a matter needs to be reported and to whom.

It certainly seems to me that as a minimum, each broking firm (large or small) should have a laid down procedure to be followed by all staff (even if that is simply that suspicious circumstances are reported to a nominated partner or director) and for that to have any value, staff must be assessed as competent to apply the rules and procedures.

Does this include reporting clients whom you suspect are inflating claims? What do you think? Let us have your views.

Waltham Pitglow is a specialist in compliance and competence

Using this CPD page
For the vast majority of practitioners and indeed support and supervisory staff in our industry, CPD is about regular learning and study that is planned, recorded, timed and evaluated.

If you are a member of a professional body with a CPD requirement then there will be certain rules regarding the quality and nature of study material, and the way in which it is recorded.

For staff of GISC members this means recording on your individual training file what the learning was, who provided it and when.

It might be structured, such as a course, a learning programme or exam study. But it can be unstructured. This form of study encompasses reading the trade press, technical material or taking part in activities to support your professional body.

Some CPD requirements are points related (a little antiquated) and others require a time value to be allocated.

For example, it might take one hour to read Insurance Times each week. Most of that could be put as a time value but, in reality, perhaps only an half hour was devoted to learning something. The rule is to be honest with yourself and record the time that is relevant.

Always take time to make a note of what you felt you gained from the activity. This is useful information for anyone else considering the same activity.

In response to the popularity of our CPD programme each week's CPD page can now be downloaded from our website. We will be preparing a binder for you to keep these in alongside the results of the exercises.

To download a PDF of this article as it appears in the magazine click here for pg20

And here for for pg21